Tuesday, August 19, 2008

Patience is
apparently a virtue: if so, then like most virtues I am sadly lacking.
The only virtues I managed to snaffle were beauty and brainitude, both
of which are not virtues per se because they can be put to evil ends
(as can patience, obviously... people like Darth 'dick' Cheney have to
kiss politicians' arses until they are old codgers, before
they earn a decent whack... but it pays off bigtime).

Anyhow. We on the USSpy team went long Crude yesterday (at
precisely the wrong time of day) and so we're not unhappy in the least.
Except (and there is always the 'except') that I was actually too patient in
trying to formulate a perfect strategic (as opposed to tactical) entry
into Precious Metals and Natural Gas.

If the essence of manoeuvre warfare is the application of fast
moving violent semi-chaos in order to force the enemy to divert
resources, then what we normally do is far more 4GW.
Strike small, strike fast, exit the battlespace quickly and
regroup.

That does not jibe, gentlemen, with the idea
of formulating a longer-term strategy. In the
highly leveraged world of futures, changing to a strategic perspective
is to some extent setting aside a core tactical advantage.
Too bad - this is one of those "twice in a decade" setups, and we're
gonna ride it. If I am right then by the time the first tactical change
is required we will be so deep in house money that we won't care if
we're wrong thereafter.

Economic News

OK - where to start. Inflation: awful - even
the 'core' PPI
could not conceal rampant inflation; it was up 0.7% for the month, as
opposed to consensus estimates of 0.2%. The actual PPI - the
one that actually feeds into producers' costs - rose 1.2% for the month
- and producing the highest annualised figure in almost a generation.
Last time prices rose this fast, Reagan had just taken office.

Apart from that, it was really just 'vanilla' bad: Building
Permits fell off a cliff to 935k from 1.14m last month, as against
consensus estimates for a fall to 959k. Housing Starts also fell - from
1.084m to 965k (consensus was for a fall to 960k, so Iguess
that counts as a 'beat'... tell that to stockholders in Lennard).

Fed Open Market Operations

The Fed's Open Market Operations desk performed 2 repurchase
operations:

a 28 Day repurchase totalling $ 20bn (the breakup and rate
of longer-term repos is not relevant to our interests);

a 1 Day repurchase totalling $3.25bn, with $2.569 billion
in Treasury-backed collateral, with a weighted average rate of 1.95%.
Too small to matter.

Headline Indices

The Dow Jones Industrial Average lost
130.84 points (1.14%) to 11348.55 points. The index high for the day
was 11478.17 15 minutes after the open, while the low was 11318.50 just
after midday. The index basically tried to hold its own for the most
part in the afternoon, and held up reasonably well.

The 30 Dow components had total volume traded of 687.48m
units. Within the index, 3 issues rose, with aggregate volume of 41.31m
units; 25 issues fell, with aggregate volume of 628.7m units.

The S&P500 Index lost 11.91
points (0.93%) to 1266.69 points. Total volume traded in the index was
3.25bn units. Within the
index, 96 issues rose, with aggregate volume of 447.34m units; 395
issues fell, with aggregate volume of 2.71bn units. The biggest
decliners (in percentage terms) were -

AutoNationInc. (AN) -0.88 (7.4%) to $11.05 on volume of
3.79m shares; and

Macy's Inc. (M) -1.5 (6.9%) to $20.32 on volume of 9.56m
shares.

The Nasdaq Composite lost 32.62 points
(1.35%) to 2384.36 points and the Nasdaq100 lost
24.02 points (1.24%) to 1908.68 points. The total volume traded in the
Nasdaq100 was 819.81m units. Within the
index, 15 issues rose, with aggregate volume of 189.01m units; 83
issues fell, with aggregate volume of 626.94m units.

Today the index fell by 24.02 points (1.24%) to 1908.68
points. The main decliners (in percentage terms) were -

A Total of 3475 issues traded today on the NYSE; today's total volume
was 4.16 billion shares. A total of 948 counters posted gains for the
day, with aggregate volume of 0.98 billion shares trading to the
upside. Exerting downwards pressure on the index were the 2441 losers,
which accounted for a total volume of 3.11 billion shares. 14 stocks
made new 1-year highs on the NYSE, while 176 shares plumbed new 52-week
depths.

Over on the Nasdaq 2955 tickers traded today; total Nasdaq
volume was 1.78 billion shares. A total of 776 stocks posted gains for
the day, with aggregate volume of 0.35 billion shares trading to the
upside. The red zone of the Nasdaq exchange was populated with 2053
losers, which accounted for a total volume of 1.41 billion shares. 29
Nasdaq-listed stocks hit new 52-week highs, while 110 shares dipped to
new 1-year lows.

Energy Complex

Energy futures finally did the business: at one stage
they were around $116 a barrel on front-month crude - a $4000 profit on
a $2000 margin position . Not bad since yesterday. that said, we're not
in Crude for a quick scalp - this is going to be similar to the
blog-induced entry when Crude was down in the 50's. Seems like an
eternity ago, don't it?

Energy Futures

Commodity

Close

Gain(Loss)

%

Crude Oil

114.87

2

1.77

Heating Oil

3.141

0.0562

1.82

Natural Gas

8.047

0.159

2.02

Gasoline RBOB

2.88

0.0648

2.3

Ethanol

2.198

0.018

0.83

The Oil Services index (OSX) contains 15
components; the total volume traded in the index was 81.05m units.
Within the index, 14 issues rose, with aggregate volume of 77.3m units;
1 issues fell, with aggregate volume of 3.74m units.

Today the index rose by 8.58 points (3.08%) to 287.47 points.
Contributing to the advance were -

General Electric (GE) -0.64 (2.2%) to $28.71 on volume of
42.06m shares; and

Teledyne Tech (TDY) -1.23 (1.9%) to $63.01 on volume of
0.21m shares.

Currency Futures

Currency futures showed some softening of the USD bid, with
the Euro being the prime beneficiary. Now, go back and read what I
wrote the other day about why we would take our currency position in
long Euro rather than short USD.

Oh, wait - you probably can't... because you're probably not a
subscriber.